Bulgaria’s blossoming economy has become an increasingly important location for international companies expanding their businesses overseas. Among the bonuses is Bulgaria’s well-established European Union (EU) membership since 2007, which widens the horizon of opportunities in its free market and further afield. These opportunities come with challenges – and payroll management is one of the trickiest. Whether your company is planning to move staff abroad or hire employees in the new territory, you cannot risk mistakes operating in Bulgaria’s payroll and income tax regime – it could cost you time and money.
Foreign companies planning to operate the payroll for their staff in Bulgaria must establish a legal entity as a subsidiary to deal with the National Revenue Agency (NRA) for taxation and the National Social Security Institute (NSSI) for insurance and other compulsory contributions. The most popular choice is to set up the Bulgarian equivalent of a private limited liability company (or LLC), known in Bulgaria as a drujestvo s ogranichena otgovornost (OOD), which has two or more shareholders. The subsidiary incorporates under the Bulgarian Commerce Act, which regulates the types of business entities allowed in Bulgaria.
However, this represents a significant move. Operating payroll in Bulgaria requires detailed practical knowledge of company, tax and employment legislation – and staying up to date with regular changes to the rules.
Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently. We recruit the staff in-country and then implement our comprehensive knowledge of tax and payroll regulations. As part of our service, Bradford Jacobs files returns and remits associated payments for tax and social security contributions directly from our payroll system to the relevant authorities. Your new staff members can be up-and-running in days rather than the weeks it would take to set up a legal entity in Bulgaria.
Outsourcing payroll in Bulgaria will streamline your operations by dealing with the following:
- Registering employees with the relevant National Revenue Agency (NRA) office in one of Bulgaria’s 28 district centres.
- Obtaining the Tax Identification Number (TIN) for foreign employees when registered with the NRA, whether long-term or permanent residents or in Bulgaria, solely for tax purposes.
- Ensuring Bulgarian employees have their Unified Civil Number (UCN), which acts as their TIN and is assigned at birth or when individuals receive Bulgarian ID documentation.
- Registering with the relevant office of the National Social Security Institute (NSSI) – is a compulsory requirement for social insurance contributions.
- Remitting due payroll taxes to the NRA and social security contributions to the NSSI.
- Drawing up employee contracts complying with the Bulgarian Labour Code and the Obligations and Contracts Act. Within three days of signing, the agreement must be filed with the NRA no later than the day the employee is due to begin work.
